Hedge fund tries to warn off AustralianSuper

A large offshore hedge fund is threatening legal proceedings against Australian­Super if the superannuation behemoth proceeds with its proposed lawsuit relating to a $2 billion airport stakes sale to the Future Fund.

A London-based hedge fund wrote to AustralianSuper last week warning it may sue the $60 billion retirement savings scheme if AustralianSuper begins legal action against the Future Fund and the trustee of listed
Australian Infrastructure Fund
.

The hedge fund is an AIF shareholder and is concerned that AIF may refuse to distribute the proceeds of the airport stakes sale in full to AIF shareholders if AustralianSuper lodges legal proceedings.

Alternatively, it is feared the AIF board may delay proceeds of the sale of stakes in the airports, including those in Melbourne, Perth and the Gold Coast.

The hedge fund has not been named but is described as “very large and well established". AustralianSuper has alleged that shareholder agreements were breached when the $82 billion Future Fund acquired holdings in the airports from AIF. AustralianSuper may issue a summons this month.

The hedge fund’s position in the listed infrastructure investment company is geared, making any payment delays particularly costly.

It is understood that Australian­Super, the country’s biggest industry super fund, has not replied to the letter from the hedge fund’s lawyers, Sydney-based Johnson Winter & Slattery. AustralianSuper declined to comment.

AustralianSuper alleges that the Future Fund and AIF broke shareholder agreements over the sale of a 29.7 per cent stake in Perth airport – which was part of the airports deal – because the price assigned to the asset was too high, thereby depriving the Melbourne-based super fund of its rights to increase its holding in Perth Airport or reducing the value of its pre-emptive rights.

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AustralianSuper holds a 5 per cent direct stake in Perth Airport but, when holdings owned indirectly through specialist funds are taken into account, the size of the stake rises to 18 per cent.

AustralianSuper would have expected the pre-emptive rights it held over the asset to have allowed it to raise its holding in the valuable asset to about 26 per cent.

The Future Fund attached a premium of 43 per cent to Perth airport based on the valuation of June 30, 2012.

It is thought that other shareholders are also considering legal action against AIF and the Future Fund. Shareholder sources surmised AustralianSuper was considering a range of measures by which it could calculate the size of its alleged loss relating to the Future Fund’s $875 million purchase of the holding in the West Australian airport.